1. Health The “Wildcard” of Retirement Planning Golden Age Farming
Prepared October 3, 2005
Cynthia Crawford
One of the most important considerations in retirement planning is taking control of health care decision making and also planning for health care expenses.
Because none of us know the future and because health is such a variable in retirement, we’ve referred to it as the wildcard of retirement planning.

2. 3 power tools for healthcare decision making and expenses
Advanced directives/durable power of attorney for health care
Health insurance
Long-term care insurance
This discussion will focus on two forms of insurance:
Health insurance and long-term care insurance
In addition, we’ll take a look at advanced directives and durable power of attorney for health care. These documents are tools to help take control of health care decisions. Let’s start with taking control of decision making.

3. Health Care Directive Express your decisions
Put your wishes in writing
Your family doesn’t have to guess what your wishes are
Also, talk with your family about your wishes
Forms are available from a variety of places
The one provided in your materials is from the Missouri Attorney general
The Midwest Bioethics Center provides excellent forms and educational materials
The Health Care Directive is a document that replaced the “Living Wills” of the early 90’s.
The term “living will” is confusing. Wills are estate planning tools. Some considered the term living will to be an oxymoron, since wills are tools used after someone has died. If a person signed a living will years ago, there have been changes in the law that make the health care directive more effective than a living will. Living wills can only be considered if a person is terminal and death is imminent, for example. Health Care Directives can be considered in cases of Alzheimer's or brain damage, where there is no reasonable hope of recovery.
What is the law for the medical community if there is not a health care directive? The medical community is required to use every bell and whistle to sustain life.
Review the advanced directive p. 15 and 16 in the Life Choices booklet

4. Durable power of attorney
Delegate decision making to someone else
Unable to take care of my business due to illness
Away having too much fun
Retired from everyday business
Must say “Durable” in Missouri
Springing durable power of attorney
Durable power of attorney can be specific – for example delegating decision making to someone for health care only
Before we get to the topic of durable power of attorney for health care, let’s review the ideas of durable power of attorney.
“Durable” means that the document remains in effect even if a person becomes mentally incapacitated. In Missouri power of attorney must include the word durable. Most of us especially want the document to be in effect if we become incapacitated and adding durable means there’s no question it is in effect.
“Power of Attorney” is delegating decision making to someone else and they can make legally binding decisions for me.
When would these documents be helpful?
Unable to participate in the decision making process – too ill
Having too much fun – traveling or vacationing to see about my business
Finally, some people like to know about ”Springing durable power of attorney.” Springing means that if and only if I become incapacitated would the decision making be delegated to the person I name.
Review p. 13 and 14 in the Life Choices booklet

5. Insurance programming in retirement
Health insurance is critical
Life insurance may be less important
Long-term care insurance may be important
Disability insurance may be less important
Business insurance needs may be less
Health insurance is critical – many times we get the majority of our health care in the last stages of the lifecycle.
Life insurance may be less – fewer or no dependents. Life insurance is to protect a worker's earnings. In retirement, a person may not have an earned income stream to protect.
Long-term care insurance may be more important – we’ll look at this issue next.
Disability insurance, like life insurance, is to protect a worker’s earnings. In retirement, this is less of an issue.
The insurance associated with your farming may be less.

6. Health insurance
Think about insurance costs, especially if retiring before age 65 (or your age for full social security benefits)
Medigap – educate yourself
Medicare – part A and B
Thank goodness for Social Security Medicare. Medicare kicks in at age 65.
In addition to Medicare, a medigap policy is needed to address costs not covered by Medicare.
Prescription drugs, vision and dental benefits have all become concerns as well.
There are materials on purchasing health insurance in your packet that you will want to study.

7. Long-term care insurance
Your odds are 33% that you will spend more than 3 months in a nursing home (according to the insurance industry)
The very wealthy and very poor probably don’t need LTC insurance
AARP suggests those with assets of more than $75,000 but less than $1 million may want to consider LTC in the Midwest
If you listen to a variety of actors that are paid to promote long-term care insurance, it sounds like we’re all going to be spending years in the nursing home.
Even the insurance industry says that the odds are 2 to 1 that you’ll never spend time in a long-term care facility.
The longer you live, the higher your odds of spending some time in a long term facility.
The very wealthy and very poor probably don’t need LTC insurance
AARP suggests those with assets of more than $75,000 but less than $1 million may want to consider LTC in the Midwest

8. Also consider
It isn’t old age, but health status, that causes the need for LTC
Most claims: Alzheimer's, dementia, stroke, fractures, heart disease. Consider family history
Would family members provide care?
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9. The cost
Depends on coverage. The more years the policy pays, the higher the premium.
The younger you are when you sign up, the lower the premium (but the more years pay in)
Health when you sign up (wait too long and may not be insurable or too costly to afford)
Where you live (lower costs in Midwest)
Depends on coverage. Avg. stay is 2 years. Some insure for 3 years, 6 years, lifetime
The younger you are when you sign up, the lower the premium (but the more years pay in)
Health when you sign up (wait too long and may not be insurable or too costly to afford)
Where you live (lower costs in Midwest)

10. AARP makes these points
Many experts suggest mid-50’s is a reasonable age to start shopping or thinking about a policy
50-year old $1500/yr
60-year old $2000/yr
70-year old $4500/yr
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11. Key about LTC Insurance
KEY! Make sure you can afford premiums over the long haul
5% of LTC insurance policy holders let their policies lapse each year and are left with nothing
“Spend no more than 7% of your annual income on LTC coverage” is an insurance industry rule of thumb
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12. More resources
We’ve taken about 30 minutes in this session to talk about managing health care decision making and health care expenses. Obviously, it merits more time and consideration.
Quality materials in your packet to review.